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Aldi goes upscale, sheds dollar store image

The no-frills grocery chain Aldi is shedding its dowdy image as it goes a bit more upscale to compete with Whole Foods, Kroger, Publix, Safeway, and other chains.

The German grocer plans to spend more than $3 billion remodeling 1,300 US stores and adding hundreds of new ones, as it aims to become the nation's third-largest grocer.

But is it staying true to its roots as a deep-discount grocery store? And does it still have the huge price advantage?

Stores going upscale

When the doors open at the newly redesigned stores, shoppers told us they were not disappointed. Inside the new stores, they found a more upscale look: new signage, and lots more fresh produce in the enlarged store.

Karen McKenzie said she and her baby girl loved it.

"They have much lower prices than the grocery store," she said, "especially when you are struggling to feed a family, and you've got to save wherever you can."

Taking on Whole Foods

Ten years ago, Aldi was just another bare-bones discount grocery store, with a limited selection of fresh fare.

But now it's made a huge move into produce, especially organics, and the chain says its prices will rival anyone.

"We have a better product offering and expanded product range, and it's a much cleaner and nicer environment," regional manager Ryan Harmon said.

What about prices, which is really the main reason shoppers visit Aldi?

Small avocados were four for $5 at Whole Foods (even with Amazon's recent price reductions), but still cheaper at Aldi, where they were four for $3.79.

Asparagus was $3.79 a pound at Whole Foods, but just $2.79 at Aldi.

Non-organic grapes were $2.99 a pound at Whole Foods, $1.49 at Aldi.

Our findings were in line with what the business site GoBankinRates.com
found in an extensive comparison last year.

Busy mom Keri Gaurtrab loves Aldi's produce, and says it's a real money saver. "Just shopping at Aldi, I have been able to cut my grocery budget in half," she said.

Still off-brands, not name brands

If you are not familiar with Aldi, its one big downside remains: store brands instead of name brands.

Instead of Cheerios you get "Crispy Oats." Boxes and cans look like Campbell's, Kellogg's, and other familiar brands (and they might actually be that brand inside). But 90 percent of products are Aldi house names, which some customers still are not comfortable with.

But that's how Aldi can sell for less than almost anyone, except perhaps for dollar stores. But now it is shedding that dollar-store image, and hoping to lure in more upscale shoppers.